IBM has always been synonymous with technology, from buzzy corporate mainframes to boxy personal computers, rewarding shareholders handsomely over many decades.
Arizona State University finance professor Hendrik Bessembinder crunched the numbers and discovered that IBM created $525.9 billion in shareholder equity between July 1926 and December 2019, which places it among the top 10 firms of all time in terms of shareholder wealth creation (SWC).
According to CNBC, IBM spent the majority of the 1980s as the largest single component of the S&P 500, and it dominated its industry with a 70% market share.
But times — and trades — change. Due to missteps in the early 2000s, including missed opportunities in internet technology and cloud computing, IBM ceded market share to Apple (AAPL) and Microsoft (MSFT), and investors shifted focus.
However, over the next decade, under the leadership of Arvind Krishna, who would eventually become CEO, IBM transformed itself into a major player in the hybrid cloud and AI spheres. For example, in 2019, it acquired Red Hat, the world’s largest open-source software company.
Since the July 2019 acquisition, IBM’s shares have risen 78% — gaining 35% in 2025 alone — yet analysts remain cautious about its long-term outlook.
So, why the hesitation? Here’s what you need to know about whether IBM stock should be a long-term component of your buy-and-hold portfolio.
Why is IBM’s stock down in 2026?
One announcement from Anthropic PBC explains why. On February 23, 2026, the upstart generative AI company reported that its Claude LLM could speed up the process of modernizing legacy COBOL systems.
This system-level engineering work is a core part of IBM’s business, as COBOL code is used in everything from ATM transactions to Social Security payments. IBM shares fell 13% after the announcement, marking its largest single-day decline since 2000.
In addition, between January and March 2026, IBM plummeted 20.6% — not only due to disruptions from its AI competitors, but also from a broader tech-sector correction driven by the Iran War and inflationary concerns.
Related: What does IBM do? Inside its AI, cloud & consulting business
Is IBM a good long-term buy?
Despite short-term turbulence, IBM’s 2025 performance shows that its emergence as a leader in hybrid cloud, AI, and quantum computing should continue to accelerate revenue growth — and help it resonate with investors.
On the subject of quantum computing, CEO Krishna, a PhD-holding quantum computing expert, told The Wall Street Journal that IBM is poised to be “a winner” in the quantum computing race, and that the company was recently recognized by Gartner as the “Company to Beat” in the sector.
On January 28, 2026, IBM released its Q4 and 2025 earnings, revealing that software growth and continued adoption of its AI platforms were to thank for its strong results.
IBM reported fourth-quarter earnings of $19.69 billion, beating the $19.23 billion consensus. Its adjusted earnings per share (EPS) rose 15% to $4.52, which exceeded analyst estimates of $4.32.
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By the end of 2025, IBM had booked $12.5 billion worth of AI business, a sharp increase from just $5 billion in early 2025.
For the full year, IBM reported revenue of $67.5 billion, up 8% from 2024. Its free cash flow increased by $2 billion to $14.7 billion, and the company expects this to increase by $1 billion in 2026. This signifies stability as well as the potential for even more future growth.
Despite these strengths, skepticism remains.
Related: How many employees work at IBM in 2026? Job locations & recent layoffs explained
Why should investors be cautious?
You could say that IBM’s fundamentals may have improved, but that doesn’t discount its decades of uneven performance.
Some even refer to the 2000s as IBM’s “lost decade,” when the company was simply left behind by the rise of cloud computing.
According to Kiplinger, over the 20 years from 2005 to 2025, IBM generated an annualized return of about 10.3%, slightly below the S&P 500’s 11.2% annualized return, which suggests its long-term trend doesn’t always beat the market.
And let’s not forget about Anthropic. According to Zacks, the AI company’s Claude is both a disruptor and a “potent threat” that could “redefine the entire competitive landscape” in the tech sector, forcing IBM to “fine-tune its business model” to stay competitive.
All in all, with a company like IBM, the safest bet may be to stay cautious, although its fundamentals do seem to be proving that its pivot is working.
It also has generations of innovation behind it. After all, the company was founded in the 1900s — not the 2000s.
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